About 60% MSMEs Plan To Digitise Biz Processes By 2025: Report

Almost 60 per cent of Indian micro, small and medium enterprises (MSMEs) are planning to digitise their business processes by 2025, according to a report by Vi Business, the enterprise arm of Vi, a telecom operator.

The report revealed that the top three sectors that emerged as most digitally matured are IT-ITES, financial services and transportation. While these lead to digital maturity, sectors like retail and construction are also making significant strides. 

According to the report, about 43 per cent of MSMEs plan to increase their overall digitalisation budget by 2025. Sectors with lower digital maturity index (DMI) are particularly inclined to increase their investments reflecting a growing commitment towards digital transformation.

Despite challenges like knowledge gaps and financial constraints, MSMEs are increasingly using technologies like cloud computing, IoT, and advanced workspace tools to boost productivity, collaboration, & market reach.

The study revealed that 40 per cent of MSMEs from IT and ITeS, retail and construction have adopted IoT solutions in business.

During the pandemic, while MSMEs prioritised digitalising their workspaces, in 2024, the focus has moved on to engaging with their customers digitally.

The study recommended MSMEs to focus on digital security, and digitally engaging with both customers (customer service) and prospects (customer engagement), indicating the emerging need to focus on digital strategies to meet evolving customer expectations.

Digitalization has a direct positive correlation with turnover. Further, as the firm size increases, the variation in digital maturity level narrows indicating that medium to large firms have embraced digitalization and there is scattered digital adoption among micro and small firms.

While talking about the need for data security and data privacy solutions, the report revealed that 43 per cent of MSMEs are currently using device security technologies, data and device protection.

Furthermore, MSMEs with turnover of less than Rs 10 crore are using public cloud while those in the higher turnover bracket of Rs 10 to 100 crore use private cloud, indicating the need for greater data security and privacy with the increased turnover of MSME.

Arvind Nevatia, Chief Enterprise Business Officer, Vodafone Idea said, "Our extensive MSME study highlights the encouraging progress being made by small businesses in India as well as the challenges that remain in their digital transformation."

Meanwhile, Indian MSMEs are considered the backbone of the economy, currently contributing 30 per cent to the country’s gross domestic product (GDP). There are several studies that suggest MSMEs will boost their GDP contribution to 35 to 40 per cent by 2027.